WASHINGTON -Nancy Weinstein went to Rep. Ed Royce for help when her dream of opening an interior design store in China turned into a nightmare because of what she called an “evil” landlord who threatened her life, sent thugs to scare her employees and stole $500,000 of furniture from her store.

“This man destroyed the business in China, destroyed it. It’s gone,” said Weinstein, an interior designer for Newport Beach homes. “There’s no law and order in China and the same thing can happen to” anyone.

Weinstein is one of many American business owners who have had problems investing abroad. The House Subcommittee on Terrorism, Nonproliferation and Trade held a hearing Thursday to find out what government officials are doing to help business people like her. Royce, R-Fullerton, organized the hearing.

The U.S. trade deficit is stuck in a rut and government officials have been urging Americans to set up shop abroad to increase exports. But at the same time, many American business owners “get screwed” when they invest in countries with shoddy legal systems and rampant corruption, said Rep. Brad Sherman, D-Sherman Oaks, who chaired the hearing.

But David Nelson, an international finance official for the State Department, painted a different, more positive picture. Department officials work closely with foreign governments to promote fair and transparent operating conditions for U.S. businesses, he said.

Royce, who has consistently been for free trade, said the number of cases like Weinstein’s will grow as global trade and investment expands. The State Department is not doing enough to protect American investors and it needs to change its policies, he said. Instead of just advising investors, he wants them to physically intervene.

“They’ve taken the role of hyping investment, but haven’t put out adequate notice of the dangers of countries like China,” said Royce. “They give out travel advisories and travel warnings, but don’t warn about the investment environment.”

But Commerce Department officials said that’s exactly what they do. They hold conferences to brief American business owners on the ins and outs of doing business abroad, said Israel Hernandez, the department’s point person on trade. They can only physically intervene in government-related problems, not private-sector ones, he said.

Nelson also listed ways the State Department helps American businesses. It writes country profiles that explain investment opportunities and problems in countries like China and India. Department officials also set up local business and government contacts for new American businesses, he said.

Weinstein who is moving from Long Beach to Irvine soon, opened “Nancy’s Lifestyles” in 2007 in Shanghai to bring American furniture to middle-class Chinese. But after she signed her lease on her 12,000 square foot store, her landlord demanded a higher rent, she said. She bought the building in 2005 and paid the landlord more than $1 million in rent over two years. He refused to turn on the electricity and Weinstein had to pay Shanghai Electric Company $35,000 for electricity. He also threatened her life and her employees until she paid him $35,000. Weinstein shut down the store six months after it opened because of the “constant problems” with her landlord.

After the landlord threatened her and her employees’ lives, she paid him whatever he asked for, she said. Weinstein also hired security guards for her store.

Weinstein didn’t get any help from local police and when she came to U.S. consulate officials they told her there was nothing they could do, she said. Shanghai foreign investment officials couldn’t get anything done either. And when she contacted government officials here she met an array of dead-ends and conflicting information.

She said Royce has been her only source of help. He plans to pressure the State Department by holding this hearing and trying to block legislation the State Department wants. He also plans to pressure China by trying to keep Chinese nationals from getting U.S. visas until “these cases are taken seriously.”

“Nancy’s case is a big red flag for those seeking to take advantage of opportunities that exist on paper in China,” he said.

Join the Conversation

We invite you to use our commenting platform to engage in insightful conversations about issues in our community. Although we do not pre-screen comments, we reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable to us, and to disclose any information necessary to satisfy the law, regulation, or government request. We might permanently block any user who abuses these conditions.

If you see comments that you find offensive, please use the “Flag as Inappropriate” feature by hovering over the right side of the post, and pulling down on the arrow that appears. Or, contact our editors by emailing moderator@scng.com.